Sales rose 0.5 percent from the previous month, after
remaining unchanged in May, the national statistics agency said
today in Rio de Janeiro. The median estimate from 31 economists
surveyed by Bloomberg was for a 0.6 percent increase. Retail
sales rose 1.7 percent from the same month last year, below the
median forecast for a 2 percent increase.

Inflation that climbed beyond the central bank’s target
range twice this year has caused purchasing power to contract
and consumer confidence to wither. In order to boost growth,
President Dilma Rousseff has extended stimulus measures
including subsidized credit for low-income families to buy
furniture and appliances, and this month also cut tariffs for
more than 100 goods. Consumers also face higher interest rates
as the central bank continues the biggest increase to borrowing
costs of any Group of 20 nation to tamp inflation.

Swap rates on the contract maturing in January 2015 were
unchanged at 9.88 percent at 9:11 a.m. local time. The real
strengthened 0.2 percent to 2.3013 per U.S. dollar.

The broader retail index, which includes cars and
construction materials, fell 2 percent from the year before, the
agency said today, after rising a revised 4.3 percent in May.
Consumer confidence fell in three straight months through July
to a four-year low, according to the Fundacao Getulio Vargas.

Sales of home appliances and furniture jumped 1.8 percent
in June, the statistics agency said. Sales at supermarkets and
hypermarkets fell 0.4 percent from a 1.8 percent increase last
month.

Family Consumption

First-quarter data showed Brazil’s family consumption rose
0.1 percent, down from 1 percent in the fourth quarter.
Economists in the latest central bank survey lowered their
forecasts for growth and inflation this year to 2.21 percent and
5.74 percent, respectively. Inflation in July slowed to 6.27
percent, its lowest level since January and within the central
bank’s 2.5 percent to 6.5 percent target range.

The MSCI index of Brazilian consumer-discretionary stocks,
which include Lojas Americanas, Lojas Renner SA and Cia. Hering,
tumbled 21 percent this year through yesterday. That compares
with a 25 percent surge in the last six months of 2012.